Here are a few key terms you should know before you buy a Facebook ad. Some are exclusive to the social networking site, but others are relevant to other types of online and print ads.

Bid: Facebook ads are unique in that they work on an auction-based bidding system. You’re competing against other advertisers who want to reach the same target demographic for that ad space. Facebook will give you a suggested bid range, then ask you for your max bid; we recommend your bid be within that suggested range. For a prime demographic during a peak time (like women ages 30 to 40 on Mother’s Day), the suggested bid will be much higher than usual.Click Through Rate (CTR): CTR refers to the number of times viewers click on your ad, divided by the number of impressions (the number of times your ad is shown). If your ad is shown 100 times and is clicked on 5 times, your CTR is 0.05 or 5%.

Cost Per Click (CPC): This means you pay each time someone clicks on your ad. This is the way to go for Facebook ads in which your goal is to get new clients. The other type of campaign, cost per thousand impressions (CPM), is when you pay based on the number of people who view your ad, which is fine for raising awareness but not ideal when you want people to take action (i.e., call for a nail appointment).

Campaign: An ad campaign is a group of ads that share the same theme. If your salon has several locations, it would make sense to make these groups based on location: “downtown” “East suburb,” “West suburb,” for example. On Facebook, all of the ads in a campaign share the same daily budget and schedule, but the individual ads have separate bids and targeting. You can pull reports on a campaign via the Ads Manager and see how that group of ads is performing.Daily Budget: The amount you’ve indicated you’re willing to spend on that campaign per day. (Facebook won’t charge you more than your daily budget on a given day.) One nail salon owner told us her daily budget is $15, and her Facebook ads more than pay for themselves with new clients.

Daily Spend Limit: Think of this like a credit limit on a credit card. It is the most money Facebook will allow you to spend in one day. Like a credit limit, your daily spend limit will increase as you make successful payments. (Or you can request a spend limit increase, though approval is at Facebook’s discretion.)

Ads Manager: One of the best things about Facebook ads is all of the real-time stats provided via the Ads Manager. The Ads Manager is part of your Facebook account and it shows you info like how many clicks your ad got, compares your different ads side-by-side in a line graph, tracks what types of users are taking action on your ads, lets you pause and restart your ad, and more. This is all vital information for creating effective ads and tweaking existing ads to get a better response.